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Consumers (and particularly millennials) often struggle with uneven monthly cash flows, and have traditionally chosen credit cards to help smooth their flow of money.

That works well for consumers if monthly bills are paid in full. But, of course, most consumers don’t pay off the credit card bills every month — and when they don’t, they often incur steep interest charges that remain outstanding and further compound.

Ultimately this not only puts them deeper in debt: it also blemishes credit scores, with potentially longer-lasting financial implications.

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In a survey of 500 millennials by LendEdu, the firm found that only 52% of respondents pay off their balance in full each month. Additionally, when asked, “Do you know your current interest rate on your credit card?” a whopping 45% said no.

Enter a new breed of credit companies that are providing credit to customers, online and in retail stores, at the point-of-sale (POS). Partnering with merchants and collaborating with credit card companies, these companies are creating a new model for transaction-based lending.

Track all the alternative lending startups in this post and many more

Companies involved in the application, underwriting, or funding processes around alternative means for obtaining a loan for personal or business use.

POS lenders are attempting to change how people pay for more expensive purchases (generally above $99) by enabling consumers to participate in a simpler credit system with longer-term financing. These firms offer more generous financing terms, including interest-free loans and low-APR payment plans.

But what do merchants stand to gain from partnering with POS lenders?

Improved financing options helps merchants draw in more customers and encourages customers to spend more with a retailer.

For example, when retailer Leesa offered POS lending company Affirm’s financing plans at checkout, it saw an 8% improvement in conversions, according to one test.